Cronin & Cronin Law Firm
Cronin & Cronin Law Firm
Long-term solutions to the region’s devastating property taxes have recently encountered a number of political challenges that fail to fully understand the issue. Ideas and programs to lessen property taxes are frequently presented, but the most immediate manner to diminish taxes is to add to the tax base. Encouraging new development creates a larger number of taxable parcels and brings down the tax rate for all properties. It is a simple calculation: Increasing the number of the properties at higher value in a community results in the tax rate become reduced to a correspondingly lower amount. It is the only surefire way to reduce taxes.
Especially during a period of healthy economic growth, politicians, trade and other civic groups should be working with the development community to find the right types of projects in their communities rather than creating hurdles to development. This issue came to the forefront when Amazon announced their choice of Long Island City for their HQ2. Cities throughout the country had sought to attract Amazon and all the quality jobs that were to come with their arrival. However, after initial excitement for winning the Amazon HQ2, the narrative quickly changed in Long Island City as headlines read that New York was providing too many tax breaks to the company. Misinformation, claiming the over $300 million in tax breaks Amazon would have received should be allocated elsewhere, led to a false impression that Amazon was being given a $300 million check. In reality, Amazon was to receive that benefit in the form of tax breaks phased in over a number of years and during those years revenue would actually increase tremendously from Amazon’s contribution to the tax base.
Amazon’s experience sends a loud message to all other companies that would consider coming to the region. The fact that one of the largest companies in the world could not make a project of such magnitude work for them, will certainly make any other company of significant size consider alternative locations to New York.
As bad as that recent message to business owners and developers is, there is now legislation pending in Albany this session that would redefine those projects that require prevailing wage to be used. A number of studies have shown that should the bill pass, it would increase costs on all projects receiving any assistance by anywhere between 25% to 45%. On Long Island, where many new developments require the assistance of Industrial Development Agencies (IDA), a prevailing wage requirement would bring development to a standstill.
The perception that the “benefits” received from agencies like the IDA enable the project to add costs in other areas is simply not true. Particularly on Long Island where taxes consistently rank among the top in the nation, there must be a mechanism to assist with the tax burden of certain new construction.
The focus should be on development to help discover other avenues by which budgets can be filled. Uninformed rhetoric each time a project of significance comes to the area will scare away developers and eliminate companies who are considering a move to New York. Requirements such as prevailing wage will add costs and bring development to a screeching halt, the numbers to move forward will not pencil out.
The ripple effects of these types of actions spread beyond the obvious ramifications of industry and new jobs. They have a direct adverse effect on property tax bills as they not only miss the opportunity to add to the tax base, but they also hurt the values of existing properties. When new development stops, areas become tired and property values decline. This is when owners grieve their taxes and are in their strongest position lessen their assessment, but the tax rate continues to go up.
By not encouraging development and opening the avenues for owners to do so, New York is not only missing an incredible opportunity to lower the tax rate, but they are also hurting the existing owners, when these are the very owners that they should be looking to protect. This example has been proven out in communities such as Patchogue and Farmingdale where new development has brought a vibrancy to each village while boosting their respective tax bases. In order to have more success stories like those communities, it’s incredibly important that our elected officials, community leaders and the development community work together on these issues for the long-term health of our region.
Brad Cronin, Esq., and Sean Cronin, Esq., are partners at Cronin & Cronin Law Firm, PLLC, Mineola, N.Y.
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